Mortgage

BofA, Chase, Citi, Ditech, SunTrust, Wells Fargo pass servicing compliance tests

National Mortgage Settlement Monitor: Servicers compliant with NMS rules

Nearly all of the mortgage servicers that are subject to the terms of the National Mortgage Settlement achieved complete compliance with the NMS’s servicing rules in the first half of 2015, according to a new report from Joseph Smith, the Monitor of the National Mortgage Settlement.

Bank of America, Chase, Citi, Ditech, SunTrust and Wells Fargo each passed every servicing compliance metric test for the first six months of this year, Smith’s office said in its new report.

This report is the first where SunTrust’s servicing compliance was tested, since it became subject to the terms of the National Mortgage Settlement in July 2014 as part of a $968 million settlement with the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, the Consumer Financial Protection Bureau and attorneys general in 49 states and the District of Columbia.

According to Smith’s report, Bank of America, Chase, Citi, Ditech, SunTrust and Wells Fargo passed each servicing performance metric.

“My tests show that servicers are adhering to the Settlement’s servicing rules, which aim to give borrowers better experiences,” Smith said. “Among six servicers and over six months, my professionals and I uncovered no fails.” 

Ocwen Financial, which is also subject to the terms of the National Mortgage Settlement, was not included in Smith’s report.

In May of this year, Smith’s office reported that it found several issues with Ocwen’s compliance with the terms of the NMS.

In August, Smith said that Ocwen had addressed the identified issues, which included replacing the executive who led Ocwen’s internal review group, adopting corporate governance principles, enhancing Smith’s access to information, and adding a hotline to allow any concerned Ocwen employees to contact Smith directly and anonymously if they see problems.

Smith’s office said that it is still conducting its review of Ocwen’s compliance testing results for the first half of 2015, therefore Ocwen was not included in this update. Smith said that his office will report its findings related to Ocwen when he is “confident” that the review is complete.

But the remaining servicers all passed all of the metrics each was tested on. There are 33 total metrics that Smith’s office uses to test a servicer’s compliance with the terms of the National Mortgage Settlement.

Included among those are items such as foreclosure sale in error, incorrect modification denial, loan modification process, billing statement accuracy, complaint response timeline, and many others.

Ditech, which changed its name from Green Tree Servicing earlier this year, failed several servicing metrics last year, including:

Metric 4, which tests whether the servicer accurately stated amounts due from borrowers in proofs of claims filed in bankruptcy proceedings

Metric 5, which tests whether the servicer accurately stated amounts due from borrowers in affidavits filed in support for relief from stay in bankruptcy proceedings

Metric 6, which tests whether loans were delinquent at the time foreclosure was initiated and whether the servicer provided borrower with accurate information in a pre-foreclosure letter

Metric 7, which tests whether the servicer provided borrower with required notifications no later than 14 days prior to referral to foreclosure and whether required notification statements were accurate

Metric 10, which tests whether the servicer waived post-petition fees, charges or expenses when required by the Settlement

Metric 12, which tests whether the servicer has documented policies and procedures in place to oversee third party vendors

Metric 18, which tests whether the servicer responded to government submitted complaints and inquiries from borrowers within 10 business days and provided an update within 30 days

Metric 19, which tests whether the servicer notified the borrower of any missing documents in a loan modification application within five days of receipt

According to Smith’s latest report, Ditech completed corrective actions for nearly all the previous failed metrics by Jan. 1, 2015. The only outstanding metrics were Metrics 6, 10, and 19.

Smith’s office said that these three metric fails have been cured, and that the remediation for Metric 10 is complete. The remediation for Metric 6 is still ongoing, Smith’s office said. And Smith said that his office is currently reviewing Ditech’s remediation for Metric 19.

Smith said that his office will provide updates on those outstanding items in its next report.